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On November 2, 2022, US Department of Commerce Assistant Secretary Thea Rozman Kendler responded to questions on the October 13 interim final rule (“the Rule”) of the Bureau of Industry and Security (BIS) regarding restrictions on advanced computing integrated circuits certain and semiconducting. manufactured goods exported to the People’s Republic of China (PRC). Pillsbury has described the Rule here. Comments on the Rule will be accepted until December 12, 2022.
Assistant Secretary Kendler noted that the Rule was crafted “based on United States national security and foreign policy interests, not economic considerations.” She also emphasized that additional FAQs will be published on a rolling basis and directed interested parties to the first set of FAQs, published on October 28 and which Pillsbury will review here.
Assistant Secretary Rozman Kendler clarified the following aspects of the FAQs:
If there is “knowledge” that an item is destined for a prohibited end use in the PRC or to a fab located outside the PRC to produce an item ultimately destined for the PRC, the Rule will capture exports to a non-model designer.
Semiconductor Fab Facilities
The public should expect additional Entity List designations in the areas of semiconductor facilities with specific computing capabilities; fab semiconductor facilities with unknown capabilities; and Chinese supercomputer end users. At this time, however, the Rule applies all PRC entities that exceed the counting thresholds, regardless of whether they are on the Entity List or not.
Due Diligence Guidelines
Although BIS does not currently expect to publish guidance on due diligence standards, interested parties should refer to the “Customer Identification Guidance” in Supplement No. 3 to Part 732 of the EAR and “Red Flag Indicators” previously published in the EAR. Parties seeking additional guidance should include their requests in their written submission.
Semiconductor Manufacturing Equipment
The Rule applies to all SME companies operating in the PRC, not just domestic Chinese companies. The license review policy will be implemented on a case-by-case basis, and the scope remains open for comment at this time.
The content of this article is intended to provide a general guide to the subject. Specialist advice should be sought about your specific circumstances.
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